Tags: Sluggish | IPO | Activity | Shares

FT: Sluggish US IPO Activity Hinges on Lawmakers for Revival

FT: Sluggish US IPO Activity Hinges on Lawmakers for Revival
(DPC)

By    |   Wednesday, 05 April 2017 08:57 AM

Wall Street and Washington have been struggling for half a decade to boost US public share listings – and a revival has yet to flourish.

“The Jumpstart Our Business Startups Act, April 2012, was meant to ease the path for small companies to raise money by loosening securities regulation. As it rounds its fifth year, a group of capital markets participants, pro-business groups, companies and lawmakers are calling for further reforms,” the Financial Times reported.

IPO activity in 2016 was the weakest since after the financial crisis in 2009.

“For investors and the overall equity market, the dearth of IPOs and the preference of many companies to remain private for an extended period matters greatly. Being able to buy shares in up and coming companies has long been a route to building substantial nest eggs, particularly for retail investors,” the FT explained.

“The drop in listings in the past few years has coincided with an increase of alternative financing with cheap debt on offer and a vibrant market for raising equity privately. Technology companies, such as Uber and Airbnb, in particular have been able to raise billions of dollars without going public,” the FT reported.

“Companies are merging rather than avoiding public capital markets,” Jay Ritter, a professor of finance at the University of Florida,told the FT.

Meanwhile, one venture capitalist expert told CNBC that this year could be the best IPO market since the dot-com boom.

"I'm quite encouraged," IVP General Manager Sandy Miller told CNBC.

The venture capitalist says he's optimistic despite the performance of recent stocks post IPO, including Snap and Canada Goose.

"You don't want to see stocks double or triple on the IPO. Snap and others are up in a nice pattern and I think [they] set the stage well," said Miller.

Miller says the stocks are volatile because the start-ups going public today have faster growth, and bigger revenues, even if in many cases they're losing money.

"There's always a variability of opinion on companies like that we'll see volatility but the powerful trend is there," he said.

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Wall Street and Washington have been struggling for half a decade to boost US public share listings - and a revival has yet to flourish.
Sluggish, IPO, Activity, Shares
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2017-57-05
Wednesday, 05 April 2017 08:57 AM
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